Nexant Partners With Consolidated Edison in New York to Design an Innovative Pricing Pilot for Testing Demand Rates

SAN FRANCISCO, Feb. 6, 2019 /PRNewswire/ -- In December, the New York Public Service Commission approved Con Edison's Innovative Pricing Pilot, which will test demand rates for residential and small business customers. Nexant worked closely with Con Edison on pilot and rate design and implementation planning. Nexant will also conduct the impact evaluation for the pilot. Insights from this pilot will help Con Edison develop its long term pricing strategy for better managing delivery and energy costs and for offering customers more opportunities to reduce their electricity bills. To our knowledge, this pilot will test a wider variety of demand rates on more customers than has ever been done in the industry.

Con Edison began deploying AMI meters in 2016 with the first installations occurring in Staten Island, Westchester County and Brooklyn. The Innovative Pricing Pilot is being implemented in Staten Island and Westchester County starting in early 2019 and in Brooklyn starting in early 2020. It is scheduled to run for two years in each region.

Randomly-chosen groups will be recruited using different enrollment tactics including opt-in (requires customer to enroll) and opt-out (requires customer to opt out) recruitment. Roughly 25,000 residential and 4,500 small business customers will be offered a demand rate through opt-out enrollment and roughly 90,000 residential customers will be offered rates through opt-in enrollment in Staten Island and Westchester. In Brooklyn, rates will be offered through opt-out enrollment to almost 45,000 residential and 6,400 small business customers and 120,000 residential customers will be solicited through opt-in enrollment. The pilot evaluation will compare enrollment rates, demand response and customer satisfaction across four demand rates that differ with respect to the magnitude and timing of demand charges for delivery service and two demand subscription rates. The impact of bill protection, marketing incentives and other recruitment tactics will also be examined.

"The pilot is complex but is based on a strong, randomized control trial experimental design," said Dr. Stephen George, Senior Vice President at Nexant who led the pilot design effort. "We anticipate that findings from this pilot will provide useful insights not only to Con Edison but to the industry as a whole as utilities seek ways to better align rates with cost drivers, especially delivery costs, which are driven more by demand than by usage," said Dr. George. The first evaluation of the pilot will start in late 2019, led by Dr. Eric Bell, Principal Consultant at Nexant. The final evaluation will be concluded in March 2022.

"Nexant is thrilled to collaborate on this cutting edge rate design pilot with one of the largest investor-owned utilities in the country," said Charlie Bicknell. "The pilot is an excellent example of how Nexant partners with industry leaders to conduct sound research designed to guide key strategic decisions."

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